Beware: Financial Scams are More Sophisticated than Ever Before

Financial Scam

Have you ever received an unsolicited email in your inbox regarding your multi-million-dollar inheritance from a long-lost family member? Or a lucrative investment opportunity offshore? Chances are, you’ve probably been exposed to a financial scam before one way or another, particularly as technology evolves and the complexity of criminal organisations improves. Professional investor of 27 years, Andrew Baxter, can smell a financial scam a mile away – here’s how:

Financial scams usually all work in much the same way – they come as an unsolicited approach online or via telephone, and more often than not these ‘opportunities’ claim to be from a financial advisor or stockbroker, requiring your capital for a particularly lucrative investment offshore. I’ve been around markets for over 27 years now, working as a financial advisor, stockbroker and also had a brief stint in the hedge fund space– with that, what I can assure is that if someone is selling the ‘get rich quick’ story, they’re probably full of crap. No longer are financial scams the old age ‘Nigerian looking to deposit money into your bank account’ story, now, they are much more sophisticated operations run by very intelligent criminal organizations.

Leaving names out here, a good friend and long-term client of mine, unfortunately, fell victim to one of the most sophisticated financial scams I’ve ever seen. This is a story of million dollars that occurred to arguably one of the more sophisticated investors that I work with closely. After being approached by an offshore investment firm located in Mayfair, London, my friend was pitched a lucrative investment opportunity. With listed offices across the globe, their website and staff appeared to be of top quality – all very professional, cordial, and with the right documentation and correct financial procedures. After parking a small amount of cash over to the firm, his investment proved successful to which he was able to withdraw and claim the profits – happy days. When he subsequently did this a number of times successfully on small amounts of money, our now confident and trusting friend decided to go big and send over nearly $1m Aussie dollars to this firm. Upon his request for redemption on the lucrative profits sometime later, the organization required a further 15% sent over as withholding tax (which he did) and then some local tax to pay (which he did) after going through the trustee company in Singapore. Then, without any warning, the money was gone. The company ceased to exist, and the funds had disappeared into the ether, never to be seen again. This story is heart aching and isn’t that uncommon in today’s world, however, upon reflection these instances all appear to follow a similar suit – located offshore, arise unsolicited, and are too good to be true promising guaranteed, exuberant returns.

Hearing the above hurts and is why I wanted to write this article – so that others can be aware of the red flags and don’t fall victim to these in 2022. When investing your money or partnering with a financial organization, the first step to avoiding a scam is to ensure that the company operates in your own jurisdiction. The second you go offshore is the second you forgo legislative power to claim anything down the line. Secondly, ensure you know that the mob you are dealing with is licensed. Here in Australia, that would mean having an Australian Financial Services License (AFSL) to which an FSG and PDS would therefore need to be provided. Lastly, always talk to the same person. If you’re finding that there are multiple levels of people that you need to talk to in order to get an answer – chances are, they are probably stalling you. Have a trusted point of contact and use them for everything.

All in all, in today’s world of instant information and technology, getting invested and having control over your own money has never been easier. With what we do via Australian Investment Education, we offer a safe way to generate income from the stock market where newbies can learn the proper methods to navigate the financial markets themselves. For anyone looking to get a gauge on what I’ve done professionally for the last 27 years, join me at one of our webinars from the following link: http://bit.ly/aie-mjb.

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